Renewing Your Mortgage in Rocky Mountain HouseWhy the Bank's Letter Is an Opening Bid, Not a Final Offer

Renewal vs. Switch vs. Refinance

Three words that get mixed up constantly, and the difference matters because the rules and costs are different for each.

• Renewal: same lender, same balance, new term. Sign the letter (or a negotiated version of it) and carry on.
• Switch: same balance and amortization, new lender. Done at maturity there's no penalty, and the new lender typically covers the legal and appraisal costs. This is what most people mean when they say "shop my renewal."
• Refinance: the mortgage itself changes—more money, a longer amortization or both. That's a new approval with a stress test. We explain refinancing here.

The 120-Day Window

Lenders will hold a rate for up to 120 days before your maturity date. That's your shopping season: we lock in the best rate available today, and if rates fall before you close, you get the lower one. If they rise, you're protected. There's no cost and no obligation to take it.

• Six months out: we start the conversation and pull your penalty-free maturity date, balance and current rate.
• 120 days out: we hold a rate with the lender that fits.
• 30 days out: your bank's letter has arrived—now you can compare it to a real number instead of guessing.

Why the Letter Is Rarely Their Best Rate

Banks price renewal letters for the average customer, not the shopped one. The rate in the mail is often 0.30%–0.80% above what the same bank would offer a new customer walking in the door—and above what a competing lender will offer to take you. Reply with a real competing rate and the offer usually improves. Or skip the negotiation entirely and take the lender that's already lower. See today's live renewal rates before you read the letter.

The Bill

What you pay, and what the new lender pays, on a straight switch at maturity.

• Penalty: $0. Your term is over; there's nothing to break.
• Legal and appraisal: covered by the new lender on almost every switch, or handled through a title company at no charge to you.
• Discharge fee: your old lender charges a few hundred dollars to release the mortgage. Many new lenders add a cash-back to offset it—we'll tell you which.
• Your time: a signing appointment (often by video) and a short document list. That's it.

No Stress Test on a Straight Switch

Since November 2024, federally regulated lenders no longer re-apply the stress test when you switch lenders at renewal—as long as the loan amount and amortization don't increase. Insured mortgages were already exempt. That opened the door for a lot of Albertans who'd been told they were "stuck" with their bank.

• What still needs qualifying: adding money or extending the amortization—that becomes a refinance.
• Income changed? Tell us. Lenders still review income and credit on a switch; some are far more flexible than others.

Insured vs. Insurable Pricing

Your rate at renewal depends on which shelf your mortgage sits on, and a lot of people are on a better shelf than they think.

• Insured: if your original mortgage had default insurance (under 20% down), it keeps insured pricing at switch—the sharpest rates in the market, for life.
• Insurable: no insurance, but the home is under $1.5 million, you've got 20%+ equity and the amortization is 25 years or less. Lenders can insure it behind the scenes and price it nearly as sharp.
• Uninsurable: everything else—over $1.5 million, 30-year amortizations, rentals. Still very competitive; just a slightly different set of lenders.